In addition to the fiscal cliff, we're also staring down the potential discontinuation of the government's agricultural subsidies, which could make our farming industry harder to maintain and therefore, food prices will start spiking. Milk will shoot up to $8 a gallon, for starters.

The farm bill is one of the nation's top spenders on energy research and production, and conducts a ton of R&D on conservation, nutrician, and agricultural problems, such as pests.

Despite some Republican resistance, the tradition of farm bill renewal is very popular. Bush vetoed a farm bill in 2007, only to have it overridden by Congress.

The two most unpopular parts of the farm bill tend to come from the Republican Parties disdain for ethanol production and, of course, food stamps, which farm bills are responsible for.

If it is not voted for renewal, these things stop. And it's hard to see where things will need to go from there.

White House talks to include fix to 'dairy cliff'
By NBC's Kelly O'Donnell
2 days ago

The top lawmakers on the Congressional Agriculture Committees are prepared with a plan to avert the dairy cliff, NBC News has learned. This is an agreement between Democrats and Republicans who run those committees and oversee the massive FARM bill that affects the entire food industry and 16 million agriculture related jobs.

NBC has learned that this FARM offer -- which will be discussed during President Barack Obama's meeting with House and Senate leaders from both parties on the broader fiscal cliff -- would likely get the most attention as a "keep-milk-affordable" proposal.

Without action by Congress, dairy prices would begin to soar to an estimated $8 dollars per gallon beginning in January. The pricing would revert to 1940s farm policy, when milk costs were tied to a more labor intensive production. Dairy is the first of many food sectors that would be affected based on their respective seasons.

This bipartisan proposal would extend the terms of the most recent FARM Act, which expired Sept. 30. The length of the extension is still to be determined, though an extension for less than one year is preferred. Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., said she intends to keep fighting for a full 5-year extension, but believes a short term solution is needed now.

The FARM bill passed the Senate but House GOP leaders have refused to bring it the floor for a vote. There are deep partisan divides over parts of the bill like farm subsidy reforms that would reduce what are known as "direct payments" to farmers.

Lawmakers behind this idea in both House and the Senate hope to include the FARM extension in any fiscal cliff deal should one materialize

While Congress faces escalating pressure to avoid the fiscal cliff, a key Cabinet member is issuing dire warnings for the economy if Washington fails to immediately act on other vital legislation waiting in the wings.

"It is unconscionable that we don't have a farm bill," U.S. Secretary of Agriculture Tom Vilsack said in an interview that aired Sunday on CNN's "State of the Union." "This is just historic."

The five-year farm bill, which aids farmers with price protections and subsidies, expired on September 30 after the House faced GOP division over extending the bill. Some conservative lawmakers said the newer version didn't go far enough in reform, while others said the price tag was too high, especially in provisions dealing with food stamps.

House Speaker John Boehner said in September that the chamber would readdress the issue after the election.

The recent expiration doesn't affect existing federal support for the remainder of 2012, but Vilsack cautioned that Americans could see stark changes come 2013.

"When you consider what rural America does: It provides most of the food, a lot of the water, almost all of the energy and fuel as well as many, many jobs connected to what happens in rural areas," Vilsack told CNN Chief Political Correspondent Candy Crowley.

Consumers, for example, could see a sharp increase in the price of milk–almost double current prices–if Congress doesn't act by January 1, when the dairy subsidy expires, or shortly thereafter, Vilsack said.

The reason: If a new bill isn't passed or the most recent one extended, the formula for calculating the price the government pays for dairy products defaults back to a 1949 statute. Under that formula, the government would be forced to buy milk at twice today's price - driving up the cost for everyone, CNNMoney reports.

The absence of farm legislation will also hurt agricultural exports, farmers markets, hunting grounds and farming families, Vilsack added. "Across the board, in virtually every aspect of our economy and society, there is an impact."

And Vilsack, who previously served two terms as Iowa governor, plans to see it through. Asked if he intends to stay on during President Barack Obama's second term, he said he's "absolutely" happy to keep his job if he can.

"I'm here as long as the president's pleased with my service. At least that's what the certificate says," he said. "I've got a great job and I'm privileged and honored to have it."

Vilsack's wife, Christie, challenged incumbent Rep. Steve King for his Iowa seat this year but failed to defeat the longtime Republican congressman. King was recently chosen to chair a House subcommittee that has oversight power over the Agriculture Department.

CORVALLIS – Jeff Lewis can tell you exactly how many steps each one of his 240 cows take each day.

Every one wears its own personal pedometer that helps Lewis monitor their health.

He can tell you how much milk each one of his Holsteins produced during the three milking sessions that happen every single day of the year.

“We don’t take Christmas, New Year’s, birthdays or any day off,” he said.

And his computer terminal will even tell him when a cow might be coming down with an illness and needs a little tender loving care.

All of that technology helps him stay as competitive as possible in what’s become a very competitive business.

But what Lewis can’t tell you is how much it’s going to cost him to buy the feed necessary to keep his cows producing as much as possible. He can’t say for sure just what kind of price his milk will bring a few months down the road.

And he has no idea what Congress might do about the now expired national farm bill that could have far reaching impacts for both farmers and milk lovers.

That’s a challenge that all dairymen are facing across the country.

What Lewis does know: that 2012 could well go down as one of the worst year for feed costs that he can remember at his family’s MuJuice Dairy just north of Corvallis.

Blame that on this past summer’s drought that put a huge dent in the corn crop in the Midwest that’s caused other feed prices to soar as well.

This year, corn prices have jumped to about $300 a ton. Lewis can remember a time before ethanol became all the rage that he paid something closer to $90 a ton.

“When corn goes up, it puts pressure on all the other types of feed we use,” he said.

His cows eat a mixture of ground corn, barley, corn silage, alfalfa hay and a mineral/protein mix. They consume close to 50 pounds of the mix a day.

On average, each cow will produce 87 pounds of milk every day. A gallon of milk weighs about 9 pounds.

While the prices he’s paid for milk are decent right now, Lewis said they haven’t kept pace with the prices he pays for feed, fertilizer and other farm costs.

His father, Rollie, built the cow barn in 1978 and started milking the next year. The dairy has been operating non-stop since then.

“When my dad first started, there were 40 dairies operating in the Bitterroot,” Lewis said. “There are only four now and two little ones. What’s happened here in the Bitterroot is no different then what’s happened across the nation.”

Smaller dairies are struggling to compete against large regional operations that milk thousands of cows each day, even at a time when many consumers are looking for locally produced foods.

“Every dairy in the state of Montana could disappear and there wouldn’t even be a blip on the national scale,” he said.

With the nation’s lawmakers focused on the pending fiscal cliff, dairy farmers are left wondering about the impacts their industry could face if Congress doesn’t approve the 2012 Farm Bill.

The bill includes the Milk Income Loss Contract program, a safety net for dairy farmers designed to help offset low milk prices and high input costs.

On the consumer end, some claim if Congress doesn’t pass the farm bill that amends a farm policy dating back to the Truman presidency, milk prices could soar to $6 to $8 a gallon.

“There’s been a lot of talk about the farm bill,” Lewis said. “The whole thing is up in the air right now. No one is sure what to expect.”

Lewis said he and his family did a lot of restructuring of their business after the “brutal year” of 2009 in an effort to become more financially secure and be competitive, but the unknowns headed for the industry right now are unnerving.

“It can kind of scare a guy,” he said.

He’s been told to expect to see a $2 to $3 decrease in the price of dairy for every hundred pounds of milk in January and February.

“No one gets into this business to get filthy rich,” Lewis said. “We’re kind of at the mercy of everyone else. It does get in your blood. I really don’t have a desire to do anything else.”

The price of milk is set to rise dramatically at the beginning of the year if the current farm bill expires. The end of the current law would force the government to revert to a 1949 law for setting milk prices, which some analysts say could lead to a doubling of the milk price.

Stabenow had steadfastly held out for passage of a five-year farm bill. The Senate passed a bill with $23 billion in savings in the spring and the House Agriculture Committee passed one with $35 billion in deficit reduction over 10 years. Both had cuts to farm subsidies and food stamp spending.

House Republican leaders tried to move a one-year extension of the 2008 bill in July but pulled back at the last minute. House Agriculture Committee ranking member Collin Peterson (D-Minn.) spearheaded rural Democratic opposition to the GOP bill and was instrumental in sinking its chances.

Peterson is participating in talks with Stabenow, House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Senate Agriculture Committee ranking member Pat Roberts (R-Kan.). A Democratic aide said negotiations over the exact shape of the extension are not final yet.

"We will wait until the very last opportunity to pass a full farm bill," Stabenow said Friday, even as she acknowledged work on a one-year extension had begun.

"We certainty want to make sure we have a responsible short-term extension if it is not possible to get the farm bill done," she said.

Rural lawmakers have hoped that the farm bill could ride on a "fiscal cliff" agreement before Jan. 1. Once 2013 arrives, work on the farm bill must start from scratch. Some lawmakers are worried that new crop insurance programs created in the House and Senate versions of the 2012 farm bill could be scrapped next year under increasing budget pressure.

The 2008 farm bill by contrast contained direct payments, a farm subsidy that is paid based on historic production and is received by farmers who no longer farm. That system is viewed as deeply unpopular and could be vulnerable to cuts that would be worse that what was included in the bills approved this year in the House and Senate.

Stabenow said that a simple extension would have to be passed under expedited procedures. She said any member filibustering the extension would face massive ire.

"Whoever objects to it would have to deal with doubling the price of milk," she said.

WASHINGTON — The leaders in both parties on the House and Senate Agriculture committees have agreed to a one-year extension of the 2008 farm bill that expired in October, a move that could head off a possible doubling of milk prices next month. But House leaders have yet to say whether they will allow a vote on it.

Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and House Agriculture Chairman Frank Lucas, R-Okla., announced Sunday that they had agreed on a last-minute extension that would extend the farm bill and replace dairy programs that expire at midnight Tuesday. Expiration of those dairy programs could mean higher milk prices at the grocery store within just a few weeks.

But the House GOP has yet to endorse the committees’ extension agreement, and leaders are also considering two narrower extension bills: a one-month extension and an even smaller bill that would merely extend dairy policy. As of Sunday night, Republican leaders had not scheduled a vote on any of them.

The farm bill talks come as negotiators are still at an impasse on averting a broader fiscal cliff combination of higher taxes and spending cuts Jan. 1. Farm leaders had originally hoped to wrap the larger bill in a fiscal cliff deal.

A spokesman for House Speaker John Boehner said Sunday that Republican leaders had not decided how they would proceed on the farm extension, though a vote could come as soon as Monday.

One potential hurdle for the one-year extension is its cost: The nonpartisan Congressional Budget Office on Sunday estimated the extension, which also includes disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.

Boehner has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version of a farm bill in June. The farm bill, generally passed every five years, includes domestic food aid, farm subsidies and other help for rural areas.

But the prospect of higher milk prices has prompted some action. Agriculture Secretary Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.

Instead of just extending current dairy policy, the extension bill includes an overhaul of dairy programs that was included in both the Senate and House committee bills. The new dairy programs include a voluntary insurance program for dairy producers, and those who choose that new program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices — an idea that hasn’t gone over well with Boehner.

In July, he called the current dairy program “Soviet-style” and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.

Stabenow blamed Boehner for getting to the point where an extension is the only option. “The lack of action by the House Republican leadership has put us in a situation where we risk serious damage to our economy unless we pass a temporary extension,” she said.

One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill’s cost over five years. Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.

On Sunday, Lucas said he hoped the extension would pass both chambers quickly as GOP leadership mulled their options.

“It is not perfect — no compromise ever is — but it is my sincere hope that it will pass the House and Senate and be signed by the president by Jan. 1,” he said.

The extension would make modest cuts in a controversial farm subsidy known as direct payments, which pays farmers whether they farm or not. According to the CBO, the extension would cut $1.3 billion from the subsidy’s $50 billion cost over 10 years. Both the House and Senate farm bills eliminated that subsidy completely.

The extension would also extend and pay for several farm bill programs that expired in October, from a small watershed rehab program to funding for rural “microentrepreneurs” to help for farmers’ markets and organic producers. The bill budgets about $850 million for immediate disaster assistance, with most of that money going to livestock producers.

I wonder how much there could cut the deficit if there were to cut the subsidies to agricultural and defense companies.

Not much on the farm side.

A whole 17% of the farm bill actually goes to farmers. The rest is entitlements and spending unrelated to ag.

That being said, I think with a little better fraud controls, most of the entitlement spending is worthwhile from a societal perspective. WIC is really good. Food stamps needs fraud controls, but providing food to needy people is worthwhile. Perhaps we need some controls to keep lifers from being lifers, but on the whole I don't hate the idea of foodstamps. School lunch programs I think are solid.

"You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream – the maximum of individual freedom consistent with order – or down to the ant heap of totalitarianism." -Ronald Reagan

On a side note, does anyone actually know how they came up with the $8 milk thing? I don't know anything about milk industry.

Estimates. The idea is that once the government starts buying milk at the mandated prices from the 30s plus inflation at the volume that they would have to buy that the market price would end up at that level.

Can't speak to the exact number, but obviously if the supply is short, demand is the same then the price will have to go up.